Outset Medical Q1 Earnings Call Highlights

Key Points

• Q1 revenue was $27.9 million, down slightly year‑over‑year due to lumpiness in capital order timing, but management reaffirmed full‑year guidance of $125–$130 million and expects the bulk of growth to come in Q3–Q4.
• Margins and cash improved materially—non‑GAAP gross margin rose 620 bps to 43.8% and non‑GAAP net loss narrowed to $15.4 million—while the company ended the quarter with $161 million in cash and now expects full‑year cash usage of less than $40 million.
• Next‑generation Tablo is slated for a limited release in Q2 into Q3 with a full launch thereafter, touting hardware/software upgrades and being positioned as the first dialysis system cleared under the FDA’s 2025 cybersecurity requirements, which management says could accelerate replacements and create new EMR integration revenue opportunities.

Outset Medical NASDAQ: OM reported first-quarter 2026 revenue of $27.9 million, as management pointed to “consistent execution” in console utilization, new customer additions, gross margin expansion, and cash discipline, while acknowledging that capital order timing weighed on results.

Chair and CEO Leslie Trigg said the quarter’s revenue was “down slightly from the fourth quarter due to the lumpiness of capital sales,” but emphasized the company “remain[s] confident” in its full-year growth plan, supported by a deep sales pipeline and an upcoming next-generation Tablo launch.

Quarterly results shaped by capital sales timing

Chief Financial Officer Renee Gaeta said revenue declined 6% year over year from $29.8 million in the first quarter of 2025, “largely due to some lumpiness in the timing of capital orders.” Product revenue was $18.6 million, down 13%, including capital sales of $5.4 million. Consumable sales were “a bit stronger than anticipated” at $13.2 million, Gaeta said.

Gaeta added that about $1 million in capital deals shifted out of the first quarter and are expected to close later in the year, noting the company had anticipated this year-over-year dynamic on its prior earnings call. Service and other revenue rose 10% to $9.3 million, and recurring revenue from consumables and service totaled $22.5 million, which Gaeta said was roughly flat sequentially and versus the prior-year period, “both as we anticipated.”

Margin expansion and profitability focus

Outset posted notable margin improvement. Gaeta said non-GAAP gross margin expanded 620 basis points year over year to 43.8%. Product gross margin increased 400 basis points to 52.4%, driven by sales mix, while service and other gross margin improved to 26.7%—up more than 1,600 basis points from 10.3% a year earlier—reflecting what she described as “strong execution” and progress toward “the next milestone of 50% company-wide gross margin.”

Non-GAAP operating expenses increased nearly 4% to $25.6 million, which Gaeta attributed to investments in systems and people. Non-GAAP operating loss was $13.4 million, in line with the prior year. Non-GAAP net loss was $15.4 million, improving 32% from $22.8 million in the first quarter of 2025.

On cash, Gaeta said Outset ended the quarter with $161 million in cash equivalents, short-term investments, and restricted cash. The company used approximately $12 million during the quarter, which she said was less than previously forecast due to expense discipline and working capital management. Looking ahead, Gaeta said Outset now anticipates using less than $40 million for the full year, “roughly 15% better than we previously expected.”

Pipeline strength, quarterly phasing, and guidance

Management reaffirmed full-year 2026 guidance. Gaeta said Outset continues to expect revenue of $125 million to $130 million, representing 5% to 9% growth over 2025, with “the majority of the 2026 growth coming in the third and fourth quarters.” She also reiterated expectations for full-year non-GAAP gross margin in the low-to-mid 40% range, citing the mix effects of console shipments versus consumables.

In the Q&A, Stifel analyst Rick Wise asked for more detail on the capital order “variability and lumpiness.” Trigg said the pipeline “did continue to grow in Q1,” with strength across size, diversity, and maturity. She said Outset is “in the late stages of several large new deals” expected to close in 2026 and sees “an emerging refresh opportunity” among existing customers with older Tablo fleets who have communicated an intent to buy replacement units “in future quarters and in future years.”

Trigg characterized the primary challenge as close timing, noting the capital sales cycle is “less predictable” than utilization once consoles are installed. She said deals that slipped out of the first quarter are expected to close in the “Q2 through Q4 timeframe,” supporting confidence in the annual outlook.

Wise also asked about quarterly phasing. Gaeta said the company expects a “modest step-up” in the second quarter, with more growth in the third and fourth quarters. She added that results should show “sequential step-up in each quarter,” while emphasizing that the timing of capital order closes will influence the cadence.

TD Cowen analyst Colin Clark pressed on what underpins the company’s confidence in closing delayed orders. Trigg said confidence is informed by deal staging and Outset’s growing ability to use historical data to estimate close probabilities across quarters. She said the company has visibility into both new customers and existing customers expanding based on their financial and clinical results with Tablo.

Next-generation Tablo launch and cybersecurity positioning

Trigg said Outset is preparing for an initial transition to next-generation Tablo later in the second quarter, with a “limited release extending into the third quarter, then ramp to a full launch.” She described the next-generation system as including hardware and software enhancements intended to improve performance and reliability, and said the platform is “the first dialysis system” Outset believes has been cleared under the FDA’s 2025 cybersecurity requirements.

Trigg framed cybersecurity as an increasingly important purchasing factor for hospitals and health systems and said the company views Tablo’s “secure-by-design principles” and layered access controls as a “significant new competitive advantage.” In Q&A, she added that the next-generation system “could” accelerate replacement timelines for older Tablo consoles.

Commercial leadership update and EMR roadmap commentary

The company also introduced Derick Elliott, who joined as EVP of Commercial about a month prior to the call. Elliott said he has spent his first month reviewing the business, meeting leadership and sales teams, evaluating pipeline and forecasting methods, and visiting customers. He cited more than 30 years of experience serving similar hospital customers, including 17 years at Stryker in sales leadership roles. Elliott said his near-term priorities include helping the commercial organization prepare for the next-generation Tablo launch and supporting customer-level efforts to advance and close business in 2026.

Separately, Clark asked about EMR integration, referencing a company webinar with Reid Health. Trigg said Tablo currently offers one-way data transfer and is directly integrated with Epic, Cerner, and other EMRs, enabling treatment data to upload to a health system’s EHR after each treatment. She said Outset sees an opportunity to add a future bidirectional feature that would allow prescription data to transmit from the EMR to Tablo, which she said could deliver value for customers and represent an incremental recurring revenue opportunity through additional EMR features.

In closing remarks, Trigg said more than 1,000 facilities are using Tablo and that more than 3.5 million cumulative treatments have been performed. She also pointed to “more than 8 trillion data points” in Outset’s cloud platform, which she said supports analytics, innovation, and customer experience improvements.

About Outset Medical NASDAQ: OM

Outset Medical is a medical technology company specializing in innovations for renal care. The company's flagship offering, the Tablo Hemodialysis System, is designed to streamline and simplify dialysis treatment across acute and outpatient settings. By integrating water purification, dialysate production, and treatment monitoring into a single device, Tablo aims to reduce the complexity and logistical burden traditionally associated with hemodialysis therapy.

Tablo's modular design allows for rapid setup and flexible deployment in hospitals, clinics, long‐term care facilities and emergency response scenarios.

This instant news alert was generated by narrative science technology and financial data from MarketBeat in order to provide readers with the fastest reporting and unbiased coverage. Please send any questions or comments about this story to contact@marketbeat.com.